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RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION
G.R.No.L75342March15,1990
SPOUSESCELEDONIOMANZANILLAandDOLORESFUERTE,andINESCARPIO,petitioners,
vs.
HON.COURTOFAPPEALSandJUSTINACAMPO,respondents.
BasilioV.Lanoriaforpetitioners.
VillamorJ.Antonioforprivaterespondent.

MEDIALDEA,J.:
Thisisapetitionforreviewoncertiorariofthedecision(pp.111118,Rollo)oftheIntermediateAppellateCourt,
now Court of Appeals, in ACG.R. CV No. 00925 entitled "Justina Campo, PlaintiffAppellee, versus Sps.
CeledonioManzanillaandDoloresFuerte,andInesCarpio,DefendantsAppellants",whichaffirmedthedecision
(pp. 5556, Rollo) of the Court of First Instance of Rizal, Branch IX, Quezon City, now Regional Trial Court of
QuezonCity,inCivilCaseNo.Q28061.
Thefactsofthecasearenotdisputed.
In1963,spousesCeledonioandDoloresManzanilla(spousesManzanilla)soldoninstallmentanundividedone
half portion of their residential house and lot covered by TCT No. 59223 and located at No. 12, Casiana St.,
Santol, Quezon City. At the time of the sale, the said property was mortgaged to the Government Service
Insurance System (GSIS), which fact was known to the vendees, spouses Magdaleno and Justina Campo. The
CampospousestookpossessionofthepremisesuponpaymentofthefirstinstallmentonApril17,1963andup
tothepresent.Somepayments(Exhibits"A"to"A1")weremadetopetitionerswhilesomeweremadedirectlyto
GSIS(Exhibits"A10"to"A29").
On May 17, 1965, the GSIS filed its application to foreclose the mortgage on the property for failure of the
Manzanillaspousestopaytheirmonthlyamortizations.
OnOctober11,1965,thepropertywassoldatpublicauctionwhereGSISwasthehighestbidder.
Two months before the expiration of the period to redeem or on August 31, 1966, the Manzanilla spouses
executedaDeedofAbsoluteSale(Exhibit"D")oftheundividedonehalfportionoftheirpropertyinfavorofthe
Campospouses.
UpontheexpirationoftheperiodtoredeemwithouttheManzanillaspousesexercisingtheirrightofredemption,
titletothepropertywasconsolidatedinfavoroftheGSISandanewtitle(TCTNo.135031)issuedinitsname.
InJanuary1969,theManzanillaspousesmaderepresentationsandsucceededinreacquiringthepropertyfrom
theGSIS.Uponfullpaymentofthepurchaseprice,anAbsoluteDeedofSalewasexecutedbyGSISinfavorof
theManzanillaspouses.UponregistrationthereofonMarch19,1973,anewcertificateoftitle(TCTNo.188293)
inthenameoftheManzanillaspouseswasissuedbytheRegisterofDeedsofQuezonCity.
On May 14, 1973, the Manzanilla spouses mortgaged the property to the Bian Rural Bank. On September 7,
1973, petitioner Ines Carpio purchased the property from the Manzanilla spouses and agreed to assume the
mortgageinfavorofBianRuralBank.
OnNovember12,1973,privaterespondentJustinaCamporegisteredheradverseclaimoverTCTNo.188293
withtheRegisterofDeedsofQuezonCity.

OnOctober3,1977,petitionerInesCarpiofiledanejectmentcaseagainstprivaterespondentJustinaCampoin
CivilCaseNo.31350,withtheCityCourtofQuezonCity.
On July 31, 1979, private respondent Justina Campo (already a widow) filed a complaint (pp. 2630, Rollo) for
quietingoftitleagainsttheManzanillaspousesandInesCarpiowiththeCourtofFirstInstanceofRizal,Branch
IX,QuezonCity,nowtheRegionalTrialCourtofQuezonCityanddocketedasCivilCaseNo.Q28061,praying
amongothers,fortheissuancetoherofacertificateoftitleovertheundividedonehalfportionofthepropertyin
question.CivilCaseNo.Q28061isthesubjectofthisappeal.
Aftertrial,adecisionpromulgatedonSeptember30,1982wasrenderedinfavorofthehereinprivaterespondent,
JustinaCampo.Thedispositiveportionofthedecisionreads:
WHEREFORE,premisesconsidered,judgmentisrenderedinfavoroftheplaintiffJustinaC.Campo
and the defendants and/or all persons claiming rights under them are ordered to desist from
exercisingrightsorownershipsoverthehalfportionoftheplaintiff.Themortgageofthepropertyto
theBianRuralBankisherebycancelledinsofarasthehalfportionisconcernedandaccordingly,
thesaleofdefendantInesCarpioregardingthehalfportionoftheplaintiffisherebyconsiderednull
andvoid.Thedefendants,spousesCeledonioandDoloresManzanillaareorderedtosurrendertheir
owner's duplicate copy of TCT No. 188293 to the Register of Deeds of Quezon City for its
cancellation in order that a new certificate of title could be issued in favor of the plaintiff Justina C.
Campowithregardstoherhalfportionandtoexecutesuchdocumentasisnecessarytoeffectsaid
transfer.
SOORDERED.(p.56,Rollo)
The decision was appealed by petitioners, spouses Manzanilla and Ines Carpio, to the Intermediate Appellate
Court, now Court of Appeals, which affirmed the said decision of the trial court. Petitioners' Motion For
ReconsiderationfiledwiththeCourtofAppealswasdeniedonJuly16,1986.Hence,thispetitionforreviewunder
Rule45oftheRulesofCourtonthefollowingissues:
1.WHETHERORNOTABUYEROFONEHALFPORTIONOFAMORTGAGEDPROPERTYWITH
FULL KNOWLEDGE OF SAID MORTGAGE, MAY DEMAND RECONVEYANCE FROM THE
SELLER/MORTGAGOR WHO WAS ABLE TO BUY SAID PROPERTY FROM THE MORTGAGEE
AFTERITWASLEGALLYFORECLOSEDANDOWNERSHIPDULYCONSOLIDATEDINTHENAME
OFTHEMORTGAGEE,UNDERTHEDOCTRINEOFIMPLIEDTRUST.
2. WHETHER OR NOT A PURCHASER OF REAL PROPERTY IS BOUND TO GO BEYOND THE
TITLE THEREOF IN DETERMINING THE REAL STATUS OF SAID PROPERTY TO BE
CONSIDEREDABUYERINGOODFAITH.
3.WHETHERORNOTPRIVATERESPONDENTISGUILTYOFLACHES(p.12,Rollo).
Themainissuetoberesolvedinthiscaseiswhether,underthefactsstated,petitionersManzanillasareunder
anylegaldutytoreconveytheundividedonehalfportionofthepropertytoprivaterespondentJustinaCampo.
Itispetitioners'contentionthatabuyerofonehalfportionofamortgagedpropertywho,atthetimeofthesale
had full knowledge of the existence of the mortgage, has no legal right to demand reconveyance from the
seller/mortgagor who was able to buy said property from the mortgagee after it was legally foreclosed and
ownershipdulyconsolidatedinthenameofthelatter.
Privaterespondent,ontheotherhandcontendsthatpetitionerscommittedfrauduponthem(Campospouses)by
deliberately allowing the loan to lapse, the mortgage to be foreclosed and the subsequent reacquisition of the
same after the expiration of the period of redemption without exercising their right of redemption. Upon the re
acquisitionbytheManzanillasofthewholepropertyfromGSIS,theyareconsideredtrusteesofanimpliedtrustin
favorofprivaterespondentCampo.
Both the court aquo and respondent appellate court share the view of private respondent. Both courts believe
that petitioners exercised fraud upon the Campo spouses when they bought back the whole property believing
that as the GSIS acquired absolute ownership and title to the property private respondent can no longer be
entitledtothesame.
Thepetitionisimpressedwithmerit.
Thereisnosufficientbasisforthetrialcourttoconcludethathereinpetitionersactedinbadfaithintheirdealings
withtheCampospouses.Thelatterhadfullknowledgeoftheexistingmortgageofthewholepropertyinfavorof
GSISpriortothesaleoftheonehalfportiontothem.Thereisalsonoshowingthatasoneoftheconsiderations
ofthesale,hereinpetitionersundertooktoreleasethepropertyfromthemortgageatallcosts.Withthiscondition

of the property at the time of the sale, private respondents were forewarned of the consequences of their
transactionwiththepetitioners.
Thereisalsonobasistoconcludethatpetitionersdeliberatelyallowedtheloantolapseandthemortgagetobe
foreclosed.Nospecificactorseriesofactswerepresentedandprovenfromwhichitcouldbesafelyconcluded
that the failure of petitioners to pay off their loan was deliberate. They explained that their financial condition
preventedthemfromdutifullycomplyingwiththeirobligationstotheGSIS.Inadisplayoftheirgoodfaithandfair
dealing after the property was foreclosed, the petitioners, realizing the imminent loss of the said property, even
granted the private respondent the right to redeem it from the GSIS. This right was granted in the Deed of
AbsoluteSaleexecutedbypetitionersinfavoroftheCampospouses.Moreover,itwasalsostipulatedthatprivate
respondent recognized the superior lien of GSIS on the property and agreed to be bound by the terms and
conditionsofthemortgage.ThesestipulationswereallcontainedintheDeed,asfollows:
...theVENDORSdoherebycovenantandagreewiththeVENDEESthattheyarelawfullyseizedin
feeofsaidpremisesandthattheyhaveaperfectrighttoconveythesameandthattheywillwarrant
andforeverdefendthesameuntothesaidvendees,theirheirsandassignsagainstthelawfulclaim
of all persons whomsoever, subject to the mortgage lien in favor of the Government Service
InsuranceSystemaforementioned.
ThattheVENDEESrecognizethesuperiorlienoftheGovernmentServiceInsuranceSystem(GSIS)
andagreetobeboundbythetermsandconditionsthereof,...
ThattheVENDORSlikewiseagreethatintheeventthemortgagee,GovernmentServiceInsurance
System should foreclose the mortgage on the said property, the herein VENDEES, Spouses
Magdaleno Campo and Justina Cabuag, their heirs or assigns, shall have the right to redeem or
otherwise deal with the Government Service Insurance System (GSIS) in connection with this
property.Vendeesagreethatvendorsmayrepurchasethepropertywithinthetimeprovidedbylaw.
(pp.7475,Rollo)
InviewofthefailureofeithertheManzanillaspousesortheCampospousestoredeemthepropertyfromGSIS,
titletothepropertywasconsolidatedinthenameofGSIS.Thenewtitlecancelledtheoldtitleinthenameofthe
Manzanillaspouses.GSISatthispointhadacleantitlefreefromanylieninfavorofanypersonincludingthatof
theCampospouses.
Ifitweretruethatpetitionersdeliberatelyallowedtheloantolapseandthemortgagetobeforeclosed,Wedonot
seehowthesecircumstancescanbeutilizedbythemtotheiradvantage.Therewasnoguaranteethatpetitioners
wouldbeabletoredeemthepropertyintheeventthemortgagethereonwasforeclosedasinfacttheyfailedto
redeem because they had no money. On the other hand, had they opted to eventually exercise their right of
redemption after foreclosure, they would be under a legal duty to convey onehalf portion thereof sold to the
Campo spouses because by then, title to the property would still be in their name. Either way, petitioners were
boundtoloseeithertheentirepropertyincaseoffailuretoredeemortheonehalfportionthereofsoldtoprivate
respondent in the case of redemption. Further, should petitioners let the period of redemption lapse without
exercisingtherightofredemption,aswhathappenedinthiscase,therewasnoguaranteethatthesamecouldbe
reacquiredbythemfromGSISnorwouldGSISbeunderanylegaldutytoresellthepropertytothem.
Theremaybeamoraldutyonthepartofpetitionerstoconveytheonehalfportionofthepropertypreviouslysold
toprivaterespondents.However,theyareundernolegalobligationtodoso.Hence,theactiontoquiettitlefiled
byprivaterespondentmustfail.
Justiceisdoneaccordingtolaw.Asarule,equityfollowsthelaw.Theremaybeamoralobligation,
often regarded as an equitable consideration (meaning compassion), but if there is no enforceable
legal duty, the action must fail although the disadvantaged party deserves commiseration or
sympathy.
The choice between what is legally just and what is morally just, when these two options do not
coincide,isexplainedbyJusticeMorelandinValesvs.Villa,35Phil.769,788wherehesaid:
Courtsoperatenotbecauseonepersonhasbeendefeatedorovercomebyanother,butbecausehe
hasbeendefeatedorovercomeillegally.Menmaydofoolishthings,makeridiculouscontracts,use
miserablejudgment,andlosemoneybythemindeed,alltheyhaveintheworldbutnotforthat
alone can the law intervene and restore. There must be in addition, a violation of law, the
commission of what the law knows as an actionable wrong before the courts are authorized to lay
holdofthesituationandremedyit.(RuralBankofParanaque,Inc.vs.Remolado,62051,March18,
1985)(135SCRA409,412)
In the questioned decision, respondent appellate court ruled that an implied trust exists in favor of private
respondents.Wedonotagree.Article1456oftheNewCivilCodeonimpliedtrusthasnoapplicationinthecase

atbar.Article1456provides:
Art.1456.Ifpropertyisacquiredthroughmistakeorfraud,thepersonobtainingitis,byforceoflaw,
consideredatrusteeofanimpliedtrustforthebenefitofthepersonfromwhomthepropertycomes.
There was no mistake nor fraud on the part of petitioners when the subject property was reacquired from the
GSIS. The fact that they previously sold onehalf portion thereof has no more significance in this reacquisition.
Privaterespondent'srightovertheonehalfportionwasobliteratedwhenabsoluteownershipandtitlepassedon
to the GSIS after the foreclosure sale. The property as held by GSIS had a clean title. The property that was
passedontopetitionersretainedthatqualityoftitle.
AsregardstherightsofprivaterespondentInesCarpio,sheisabuyeringoodfaithandforvalue.Therewasno
showingthatatthetimeofthesaletoherofthesubjectproperty,sheknewofanylienonthepropertyexceptthe
mortgageinfavoroftheBianRuralBank.Nootherlienwasannotatedonthecertificateoftitle.Sheisalsonot
requiredbylawtogobeyondwhatappearsonthefaceofthetitle.Whenthereisnothingonthecertificateoftitle
toindicateanycloudorviceintheownershipofthepropertyoranyencumbrancesthereon,thepurchaserisnot
to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate
rightthereof(NGAv.IAC,G.R.No.68741,January28,1988).
ACCORDINGLY,thepetitionisGRANTED.TheappealeddecisionoftheCourtofAppealsisherebyREVERSED.
CivilCaseNo.Q28061forquietingoftitleisherebyDISMISSED.
SOORDERED.
Narvasa,GancaycoandGrioAquino,JJ.,concur.

SeparateOpinions

CRUZ,J.,dissenting:
I regret I cannot give my concurrence to the wellarguedponencia of Mr. Justice Medialdea because, for all its
seeminglyflawlesslogic,thereissomethingintheconclusionreachedthatdoesnotsitwellwithmyownsenseof
justice. In Alonzov. Intermediate Appellate Court, 150 SCRA 261, I had occasion to ponder a similar problem
whenIthoughtaloudfortheCourt:
Thequestionissometimesaskedinseriousinquiryorincuriousconjecture,whetherweareacourt
oflaworacourtofjustice.Doweapplythelawevenifitisunjustordoweadministerjusticeeven
againstthelaw?Thusqueried,wedonotequivocate.Theansweristhatwedoneitherbecausewe
are a court both of law and of justice. We apply the law with justice for that is our mission and
purposeintheschemeofourRepublic.
Inthecaseatbar,IamnotquiteconvincedthattheCampospousesagreedtoassumethemortgagedebt(as
otherwisethedeedofsaleshouldhavesaidso)orthattheyunderstoodtheyweresupposedtodosoasthishas
not been clearly shown (in which case the ambiguity should be resolved against the one who caused it). The
rights(andduties)ofthepartiesarereallyuncertain,ifnotratherbaffling.Thus,thepetitioners"evengrantedthe
privaterespondenttherighttoredeemtheproperty,fromtheGSIS,"astheponencianotesonp.6,evenasthe
Deed of Absolute Sale also stipulated, somewhat inconsistently, that the "Vendees agree that the Vendors may
repurchase the property within the time provided by law." It is possible that the Vendees believed it was the
Vendors who were supposed to discharge the mortgage debt, more so since the widow Campo was allowed to
remainonthepropertybytheManzanillasevenaftertheyhadrepurchaseditfromtheGSIS.
ThelawmayreallysupporttheManzanillasandCarpioifitisstrictlyinterpreted.ButasJusticeHolmesobserved,
"Courtsareapttoerrbystickingtoocloselytothewordsofalawwherethesewordsimportapolicythatgoes
beyondthem."Ifearwemaybemissingthelessonofthisthoughtbynotapplyingthelaw,asIthinkwemust,not
withrigorbutwithjustice.

SeparateOpinions

CRUZ,J.,dissenting:
I regret I cannot give my concurrence to the wellarguedponencia of Mr. Justice Medialdea because, for all its
seeminglyflawlesslogic,thereissomethingintheconclusionreachedthatdoesnotsitwellwithmyownsenseof
justice. In Alonzov. Intermediate Appellate Court, 150 SCRA 261, I had occasion to ponder a similar problem
whenIthoughtaloudfortheCourt:
Thequestionissometimesaskedinseriousinquiryorincuriousconjecture,whetherweareacourt
oflaworacourtofjustice.Doweapplythelawevenifitisunjustordoweadministerjusticeeven
againstthelaw?Thusqueried,wedonotequivocate.Theansweristhatwedoneitherbecausewe
are a court both of law and of justice. We apply the law with justice for that is our mission and
purposeintheschemeofourRepublic.
Inthecaseatbar,IamnotquiteconvincedthattheCampospousesagreedtoassumethemortgagedebt(as
otherwisethedeedofsaleshouldhavesaidso)orthattheyunderstoodtheyweresupposedtodosoasthishas
not been clearly shown (in which case the ambiguity should be resolved against the one who caused it). The
rights(andduties)ofthepartiesarereallyuncertain,ifnotratherbaffling.Thus,thepetitioners"evengrantedthe
privaterespondenttherighttoredeemtheproperty,fromtheGSIS,"astheponencianotesonp.6,evenasthe
Deed of Absolute Sale also stipulated, somewhat inconsistently, that the "Vendees agree that the Vendors may
repurchase the property within the time provided by law." It is possible that the Vendees believed it was the
Vendors who were supposed to discharge the mortgage debt, more so since the widow Campo was allowed to
remainonthepropertybytheManzanillasevenaftertheyhadrepurchaseditfromtheGSIS.
ThelawmayreallysupporttheManzanillasandCarpioifitisstrictlyinterpreted.ButasJusticeHolmesobserved,
"Courtsareapttoerrbystickingtoocloselytothewordsofalawwherethesewordsimportapolicythatgoes
beyondthem."Ifearwemaybemissingthelessonofthisthoughtbynotapplyingthelaw,asIthinkwemust,not
withrigorbutwithjustice.
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